How to get the money back from the bankers

When the first signs of the British banks failing arose, I thought that the solution was obvious. The Northern Rock Bank was the first to go, and although at that time I did not realise that they were merely the first in a row of dominoes, I thought the best way to handle the run on the bank was for the Government to guarantee the deposits, put the bank into liquidation and reconstruct it. Liquidation is always a last resort, but it enables, in these circumstances, the liquidator has the legal right to renounce onerous contracts (too bad for the people contracting, but they took their chances when they entered into those contracts) and reconstruct the bank in the interests of the creditors and shareholders.

Instead, the Government chose to rescue the Northern Rock by injecting money into it and that seems to have been their blueprint for the other bank failures that have arisen. By not guaranteeing the deposits and putting the banks into liquidation (the deposits are in effect fully guaranteed in any event) the Government has managed to get the worst of all possible worlds. It is taking the risk, and the banks are still bound by the onerous contracts. These contracts may include a variety of transactions, but most importantly they include contracts to award bankers’ bonuses and discretionary pensions.

Public feeling has run high against the bankers who are contractually benefitting from large bonuses; the matter was highlighted a few days ago when Mr Fred Goodwin (his mate Gordon Brown may have nominated Mr Goodwin for a title, but I choose not to recognise that undeserved honour) who is now drawing a guaranteed pension of £650,000 per annum, while the bank that he ran for so many years posted record losses of £20 billion.

Morally virtually everyone regards this as obscene. It is. This moral obscenity has created an injustice, not just in respect of Mr Goodwin, but in respect of all those other bankers’ bonuses and over high, undeserved salaries. Why they have secure futures and high living standards the rest of us have to work to pay for their terrible mistakes, through our taxes.

The justification for these very high rewards has always been that if they were not paid, the banks would lose the talents of Mr Goodwin and his senior executives elsewhere. They might well have gone abroad to practice their profession for the benefit of other countries. I wish that they had, and that we had “struggled” with managers that earned far smaller sums; they could not have made a bigger mess.

What can be done about the bonuses and the pensions and very high salaries? They are, I understand, contractual obligations of the banks and the banks must honour their contracts. But contracts are more than simple obligations which require banks to pay large amounts of money to certain of their employees. There are obligations on the part of the other party to these contracts.

The huge losses suffered by Mr Goodwin’s bank were not created in the last few months. They are the accumulation of reckless management on the part of Mr Goodwin and his team. I am sure that Mr Goodwin has had a contract of employment which sets out his obligations. It seems likely to my eyes that he has broken the contract because at the end of the day the result – a £20 billion loss – is inescapable. Mr Goodwin was not paid because he was a worthy object of RBS shareholders’ funds. He was paid to manage a bank and his contractual obligations must include an obligation to manage the bank with competence.

I would advise the Government, which now controls the bank, to simply stop his pension and to sue Mr Goodwin not just for the return of his pension but also for the return of his salary and bonuses, on the grounds that Mr Goodwin did not adhere to his contract.

Of course, I have stated the matter simply and without having access to any of the documents, but it is likely that this course of action against Mr Goodwin and the other recipients of bonuses and huge benefits would be a fair and proper course of action.

Ultimately the courts would decide.  However the courts rule the public might see justice done.



9 Responses

  1. […] How to get the money back from the bankers « Robert Kyriakides’s … […]

  2. Remove his title with immediate effect would be one action, the pension Mr Fred Goodwin expects is a scandal in itself. In addition to Fred Goodwin, I also ‘choose not to recognise’ Gordon Brown as the prime minister of the UK because he has not been elected, his party did not elect him and his party did not as is the normal protocol call a general election when Tony Blair stood down as elected Prime Minister.

    I have known for a long time that there are many deals involving bank and building society employees purchasing repossessed properties in a personal capacity and making huge financial gains despite this being quite unethical. I am sure that Fred Goodwin also has assets hidden that make his extortionate pension look like chicken feed.

    ‘The International’ a new movie about the 1991 collapse of the BCCI bank has been lauded much more because it has been released at such an appropriate time.

    • Yes, banking scandals have always been a feature of life; they happen because bankers are greedy and they exploit greed in others, just like con men do.

      I am amazed why there are no plans to bring proceedings to disqulaify the old board of the RBS from being directors. They have proved to be unfit to run a limited liability company, or are disqualification proceedings only for the directors whose companies go bust for a tiny fraction of the amounts involved with RBS?

  3. I think the ‘Shelter’ ‘House of Cards’ advertisement puts the greed of this man Fred Goodwin into perspective.

    Maybe [Sir] Fred Goodwin is a socialist? Robert Maxwell was a ‘socialist’ , maybe a great deal of those knighted since 1997 are’ ‘socialists’ I think the labour party which is a ‘socialist’ brand is in fact a ‘socialite’ party, they are very ‘social’ indeed.
    “…the bourgeoisie is the only revolutionary class that has ever been victorious…”
    It seems we are living under a Oligarchy ( Ὀλιγαρχία !!!)

  4. My reason for thinking [Sir] Fred is a Champagne Socialist is because he has beem enobled in 2004 by our ‘socialist’ government.
    “It is they, none other, who are dying of cold and hunger…while you and I in our rooms on the first floor are chatting about socialism ‘over pastry and champagne.’

    Pretty much like “Gulf-Stream-Jet Environmentalist’s” ! ?
    A google search for sir freddy interesting reveals that the page is ‘vandal protected’ obviously someone has tried to put some unfavourable comments on this wiki page, I wonder why ? !

    Fred Goodwin – Wikipedia, the free encyclopedia
    Sir Fred Goodwin. Born, Frederick Anderson Goodwin ….. Hidden categories: Wikipedia pages move-protected due to vandalism | Current events as of February … – 91k – Cached – Similar pages

  5. I have no idea how the Government thought that bailing the banks out with Billions of tax payers money would kick start the economy, the banks are now just sitting on that money, they are not giving loans, it would of been far better to give the money to the general public, with large tax breaks etc, this would of freed up more money in the publics pockets, which they would of spent this would of kicked started the economy, but the banks just sitting on OUR money is no good to anyone

  6. The BBC news about Sir Fred Goodwin is interesting and I must say expected, apparently his home has been vandalised today, very oddly the BBC video shows footage of Police investigating ‘the crime scene’ and they are clearly laughing and joking knowing they are being filmed by the BBC, it would seem that this man does not have any pity from anyone, and also realy what use is the title ‘Sir’ if you are held in such contempt. The police will have a very difficult job maybe the list of suspects should everyone with a pension, mortgage, bank account etc basicly everyone!
    It is quite like the overthrow of a dictator which reading the news articles about the RBS it was being operated like a private feudal feifdom with every whim of Sir Fred Goodwin being satisisfied and a climate of fear was the way RBS was being run.

    • I cannot condone criminal damage but I cannot claim to be outraged upon hearing the news. Mr Goodwin was said to be shaken. Curious bubble that man seems to live in, if he thinks that people will not resent his actions which have cost them so dear, as to blythely stand by without ptotesting. It would not surprise me if some people reached for those traditional gestures of contempt, rotten eggs and tomatoes, but I would not, of course, condone that.

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